Issues Of Strata Property Without Strata Title
By: Ryan Lee
A strata title is the document that states the ownership of a strata parcel in a strata property. It gives the parcel owners the control of the individual units of high-rise properties and landed strata properties. Strata titles are simply like our birth certificate. It shows the legal existence of the property and legally held by the owner whose name is registered in the title. The title also shows other important details such as the built-up area of the strata parcel; the apportionment of the share units in the total aggregate share units of the development or the scheme; and the conditions or restrictions that are related to the property if there are any.
The absence of a strata title is usually not felt until you need to dispose of your property. The simple process of selling a strata unit could turn into a nightmare just because of the non-availability of a strata title
Titles are an important dealing instrument for example when charging to banks for loans. When buying a secondary property without a strata title, many financial institutions might be reluctant to finance or even do not finance such purchases. Although a Sale and Purchase agreement is deemed sufficient to enable the transfer of ownership from one buyer to another, it is not a straight forward process. The owners faced disadvantages in terms of resale value and legal complications in the event of disputes over property ownership. There are instances of banks refusing to refinance these homes.
In selling properties, the properties with titles can help facilitate their disposal whereby there is no requirement to pay consent fees or administrative fees to the developers. With strata titles, the documentation of transfer for the owner will be the Memorandum of Transfer which is required to be registered with the respective Land Registry or Land Office. On the other hand for properties without strata titles, the mode is an assignment, wherein upon the full stamp duty paid on the Deed of Assignment, all rights, and benefits derived from the Principal Sales and Purchase Agreement will be assigned to the new purchaser, technically acknowledging the new purchaser as to the rightful owner. Hence this Deed of Assignment will assign all interest, rights, and obligations of the property from the seller to the buyer of the said property without a strata title.
As long as strata titles have not been issued by the Registrar of Land Administrator, the master title is still in existence and even-though purchasers of the strata units have fully paid up their developers the land and common property in the development or scheme are still technically owned by the developer. In the worst-case scenario should the project be abandoned, if the developer company goes under liquidation or becomes insolvent, for instance, before strata titles have been obtained, the unit owners would have to go through a lot of trouble such as dealing with the appointed liquidators who will step into the shoes of the developer and submit the application to the Registry or Land Office for issuance of the strata titles who will also charge fees for their services. Eventually, the purchasers have to pay for the application of the strata titles themselves. Any additional cost will be born by the strata owner. Additional costs include surveyor’s fees and to appoint an architect to draw up to a new planning design of the building as well as other administration costs.
Another pertinent issue is that without the Strata Titles issued to the parcel owners the owners do not have absolute control over the management of the property. At this point in time, the development or scheme will be managed by the developer, and later to that, the management will be taken over by the Joint Management Body (JMB) which includes the developer. The JMB will manage until such time when the strata titles are issued and the management during this period known as the Developer’s Preliminary Management Period is undertaken wholly by the developer who steps into the shoes of the Management Corporation until such time where the strata titles that were issued under the name of the developer is transferred to the parcel owners.
It is only upon reaching the threshold of one-quarter of the Aggregate Share Units transferred to the parcel owners will the First Annual General Meeting of the Management Corporation be called for and the Management Corporation comprising of the parcel owners is formed. It is only at this instance that the parcel owners have full control of the management of their development or scheme. They are now able to get fully involved when the management in the subdivided building to maintain and manage the property as they like in accordance with the Provisions of the strata laws and through the additions of their own by-laws.
The final issue is the absence of individual title also makes it difficult to transfer properties to the next of kin. Problems also arise in relation to wills where the owner has to state the properties and the properties will go to his demise.
The strata title is also important for showing proof of the built-up area of the unit and the number of share units of the parcel within the total aggregate share units of the development or scheme. The number of share units will determine the strength of the voting rights of a parcel owner. The more shares they have the higher the voting rights are given to them. Apart from that their payment to the maintenance charges as well as their contribution to the Sinking Fund is also determined by the registered share units of their parcels.
The article is contributed by DKK Academy and all rights reserved.
